The consequence of health reform continue to unfold.
One interesting development is the response by health plans to the HHS request for transparency of price increases.
AHIP wrote a letter to HHS suggesting that health plans would be glad to provide transparency into rate increases, and would like the same standard to be applied to providers.
The letter reads in part:
"As you request transparency from our members, we urge you also to consider pursuing transparency for hospitals, physicians, pharmaceutical and device companies, and other suppliers. Consumers should have data on year-to-year price increases in these sectors, as well as quality performance information. We believe this is an opportunity to ask of all other sectors what you are asking of health plans. Pursuing transparency in these sectors is essential both to educate consumers about what drives health care costs and to ensure that patients and their doctors have the information and decision support tools they need to make informed decisions in accessing care and in choosing among providers and care options."
Asking health care providers to explain price increases implies that consumers know what prices are to begin with.
What an excellent idea.
The Healthcare Blue Book welcomes the idea that HHS will encourage all providers to provide real pricing transparency to consumers.
Showing posts with label Health Plans. Show all posts
Showing posts with label Health Plans. Show all posts
Friday, April 2, 2010
Sunday, February 28, 2010
Why do we pay more money without getting better quality care?
Value is one of the most important missing topics in the health reform debate.
We might not be so concerned with how much health care costs or how much of our national budget gets devoted to health care, IF we felt we were getting good value for our money. But the fact is that we all know we aren't getting a good value. We see prices continue to rise faster than inflation and very often that is accompanied with lower levels of service, less time with our doctors, etc.
There have been some studies focused squarely on this issue. I have commented before on the Health Affairs article last year.
Now comes a nice report from Massachusetts that examined the costs of healthcare and how they relate to quality.
What did they find?
Their preliminary review revealed serious system-wide failings in the commercial health care marketplace which, if unaddressed, imperil access to affordable, quality health care.
Their investigation has shown:
- Prices paid by health insurance companies to hospitals and physician groups vary significantly within the same geographic area and amongst providers offering similar levels of service.
- Price variations are not correlated to (1) quality of care, (2) the sickness or
complexity of the population being served, (3) the extent to which a provider is
responsible for caring for a large portion of patients on Medicare or Medicaid, or (4) whether a provider is an academic teaching or research facility. Moreover, (5) price variations are not adequately explained by differences in hospital costs of delivering similar services at similar facilities.
At The Healthcare Blue Book our work with employers reveals this fact frequently. We routinely see employees paying 500% more than necessary for common services while getting no better (and sometimes lower) quality of care. These are prices paid to in-network providers; and prices that ultimately are paid for by the employer under their health benefit costs.
The more research the better, but each study points in the same direction: there is a lot of opportunity for employers and employees to lower costs and raise quality.
We might not be so concerned with how much health care costs or how much of our national budget gets devoted to health care, IF we felt we were getting good value for our money. But the fact is that we all know we aren't getting a good value. We see prices continue to rise faster than inflation and very often that is accompanied with lower levels of service, less time with our doctors, etc.
There have been some studies focused squarely on this issue. I have commented before on the Health Affairs article last year.
Now comes a nice report from Massachusetts that examined the costs of healthcare and how they relate to quality.
What did they find?
Their preliminary review revealed serious system-wide failings in the commercial health care marketplace which, if unaddressed, imperil access to affordable, quality health care.
Their investigation has shown:
- Prices paid by health insurance companies to hospitals and physician groups vary significantly within the same geographic area and amongst providers offering similar levels of service.
- Price variations are not correlated to (1) quality of care, (2) the sickness or
complexity of the population being served, (3) the extent to which a provider is
responsible for caring for a large portion of patients on Medicare or Medicaid, or (4) whether a provider is an academic teaching or research facility. Moreover, (5) price variations are not adequately explained by differences in hospital costs of delivering similar services at similar facilities.
At The Healthcare Blue Book our work with employers reveals this fact frequently. We routinely see employees paying 500% more than necessary for common services while getting no better (and sometimes lower) quality of care. These are prices paid to in-network providers; and prices that ultimately are paid for by the employer under their health benefit costs.
The more research the better, but each study points in the same direction: there is a lot of opportunity for employers and employees to lower costs and raise quality.
Saturday, December 12, 2009
Everything Old Is New Again
Blue Cross Blue Shield of Massachusetts Inc. recently announced a deal covering 60,000 members of the Caritas Christi Health Care system. The new payment arrangement is touted as one of the country's largest experiments in fundamentally changing the way doctors and hospitals are paid.
The contract includes a so-called global payment system in which the hospitals will be paid fixed amounts based on the estimated annual costs of patients’ care instead of the fee-for-service system in which providers bill insurers for individual visits and procedures. It also includes incentives to improve the quality and affordability of care.
Not to take anything away from a health plan attempting to address the ills of fee for service incentives, but the new system has an old name: capitation.
Capitation payment systems have been used in many forms for many years. However capitation has not become the predominant payment system in US healthcare because it shifts the provider incentives from doing too much to potentially doing too little. Providers want to deliver good care and be compensated in a reasonable manner. Asking providers to be the arbiters of the value of treatments puts them in an uncomfortable, if not impossible, position.
Patients should decide the value of treatment options. Different patients will make different decisions.
To actually make a fundamental change the current healthcare system, health plans need to support pricing transparency and plan designs that let patients have some 'skin in the game' as they make decisions.
Related articles:
WSJ
Boston.com
The contract includes a so-called global payment system in which the hospitals will be paid fixed amounts based on the estimated annual costs of patients’ care instead of the fee-for-service system in which providers bill insurers for individual visits and procedures. It also includes incentives to improve the quality and affordability of care.
Not to take anything away from a health plan attempting to address the ills of fee for service incentives, but the new system has an old name: capitation.
Capitation payment systems have been used in many forms for many years. However capitation has not become the predominant payment system in US healthcare because it shifts the provider incentives from doing too much to potentially doing too little. Providers want to deliver good care and be compensated in a reasonable manner. Asking providers to be the arbiters of the value of treatments puts them in an uncomfortable, if not impossible, position.
Patients should decide the value of treatment options. Different patients will make different decisions.
To actually make a fundamental change the current healthcare system, health plans need to support pricing transparency and plan designs that let patients have some 'skin in the game' as they make decisions.
Related articles:
WSJ
Boston.com
Friday, September 25, 2009
Will Anyone Know the Price of Their Drugs?
While the Senate Finance Committee rejected a proposal requiring drug companies to rebate an additional $100 Billion over 10 years, the agreement reached earlier this summer still requires $80 Billion in drug rebates over 10 years.
Rebates are often difficult to track or understand and are not helpful for consumers that want price transparency.
If we are going to ask patients to be make cost conscious decisions about their care, we have to able to let them know how much that care costs. If patients are charged one price at the check out counter, but the government or insurance companies later get rebates on those drugs purchases; then the consumers really never know the true cost of their medications.
Maybe we should stop the rebate game as part of health reform?
An accurate, upfront price would be helpful for consumers.
To read more about the current politics around the rebates, see the NYT.
Rebates are often difficult to track or understand and are not helpful for consumers that want price transparency.
If we are going to ask patients to be make cost conscious decisions about their care, we have to able to let them know how much that care costs. If patients are charged one price at the check out counter, but the government or insurance companies later get rebates on those drugs purchases; then the consumers really never know the true cost of their medications.
Maybe we should stop the rebate game as part of health reform?
An accurate, upfront price would be helpful for consumers.
To read more about the current politics around the rebates, see the NYT.
Thursday, September 17, 2009
First Know the Problem, Then Fix It
This is the recommendation from the dean of Harvard Medical School, Dr. Jeffrey S. Flier. See his article here.
He suggests three problems that are at the root of the healthcare system.
1- A tax system that hides the true cost of employer provided coverage and significantly penalizes individuals.
2- Over regulation that limits innovation in health insurance and health care.
3- Large government programs (Medicare and Medicaid) that have fundamental inefficiencies and inequities in the way they pay for care.
All of these issues also directly impact pricing transparency in healthcare. Employer provided coverage has shielded individuals from the true cost of care and limited their need to understand healthcare pricing. Over regulation has limited competition and provided cover for insurers to hide provider pricing. Government programs underpay providers in many instances causing price shifting and distortion in the consumer market.
Dr. Flier doesn't offer a lot of hope for the current health reform initiatives suggesting that even after six decades, they haven't even fixed some obvious problems with tax deductibles for individuals.
It is hard to argue with the premise that you need know what the problem is before you try to fix it.
I would also suggest that pricing transparency is one of the core problems that needs to be understood and addressed.
He suggests three problems that are at the root of the healthcare system.
1- A tax system that hides the true cost of employer provided coverage and significantly penalizes individuals.
2- Over regulation that limits innovation in health insurance and health care.
3- Large government programs (Medicare and Medicaid) that have fundamental inefficiencies and inequities in the way they pay for care.
All of these issues also directly impact pricing transparency in healthcare. Employer provided coverage has shielded individuals from the true cost of care and limited their need to understand healthcare pricing. Over regulation has limited competition and provided cover for insurers to hide provider pricing. Government programs underpay providers in many instances causing price shifting and distortion in the consumer market.
Dr. Flier doesn't offer a lot of hope for the current health reform initiatives suggesting that even after six decades, they haven't even fixed some obvious problems with tax deductibles for individuals.
It is hard to argue with the premise that you need know what the problem is before you try to fix it.
I would also suggest that pricing transparency is one of the core problems that needs to be understood and addressed.
Wednesday, August 19, 2009
Americans can agree on many healthcare reforms
Recently John Mackey wrote a thought provoking editorial in the Wall Street Journal- The Whole Foods Alternative to ObamaCare
While some take issue with his suggestions for health reform, it is nice to hear an alternative to the assumption in Washington that the government can or should solve every problem by increasing the federal government’s involvement in personal and local issues.
Of course we need some health reforms, but the current proposal lacks many opportunities for improvement that the vast majority of the American people would support.
To name three easy ones addressed in Mackey’s article:
Pricing Transparency- What American would argue for a system that allows some patients to be charged 3, 5 or even 10 times more than the next patient for the same service at the same location? Who would support a system that allows hospitals to charge those without any insurance much more than those with insurance? The government doesn’t need to set prices; that would rightly offend many Americans as limiting the markets or freedoms. But there should be broad public support for pricing transparency so that patients will know how much healthcare services will cost and a simple rule that hospitals will charge all patients the same price.
Equal tax treatment for health insurance- What Americans would vote against allowing individuals to deduct their health insurance but allow companies to do so? The vast majority would support equalizing the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits.
Tort Reform- What American would vote against tort reform? The lawyers, sure. Anyone else? So let’s say 85% support for this one. Are the politicians listening to the people? No, they left this out too.
Since the politicians are leaving out the easy improvements that most voters would support, we have to ask ourselves who are the politicians listening to? If not the voters, then maybe the lobbyist? Big business?
With a 1000+ page bill, they ought to be able to find room for the simple things that most Americans would support.
Keep the dialogue going, maybe at some point the politicians will listen.
While some take issue with his suggestions for health reform, it is nice to hear an alternative to the assumption in Washington that the government can or should solve every problem by increasing the federal government’s involvement in personal and local issues.
Of course we need some health reforms, but the current proposal lacks many opportunities for improvement that the vast majority of the American people would support.
To name three easy ones addressed in Mackey’s article:
Pricing Transparency- What American would argue for a system that allows some patients to be charged 3, 5 or even 10 times more than the next patient for the same service at the same location? Who would support a system that allows hospitals to charge those without any insurance much more than those with insurance? The government doesn’t need to set prices; that would rightly offend many Americans as limiting the markets or freedoms. But there should be broad public support for pricing transparency so that patients will know how much healthcare services will cost and a simple rule that hospitals will charge all patients the same price.
Equal tax treatment for health insurance- What Americans would vote against allowing individuals to deduct their health insurance but allow companies to do so? The vast majority would support equalizing the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits.
Tort Reform- What American would vote against tort reform? The lawyers, sure. Anyone else? So let’s say 85% support for this one. Are the politicians listening to the people? No, they left this out too.
Since the politicians are leaving out the easy improvements that most voters would support, we have to ask ourselves who are the politicians listening to? If not the voters, then maybe the lobbyist? Big business?
With a 1000+ page bill, they ought to be able to find room for the simple things that most Americans would support.
Keep the dialogue going, maybe at some point the politicians will listen.
Thursday, April 30, 2009
Health insurers may not be looking out for their employer customers
Health insurers are supposed to be managing care to make sure employers get a good value for the money they and their employees invest in healthcare. Unfortunately employers haven't seen many rate reductions the past two decades.
In fact, insurers make a percentage of the total spend. The larger the spend, the more they make. Some may be starting to wonder if insurers would ever make real efforts to shrink the pie?
Providers have given discounts to insurers, but don't see any real value in the 'service' insurers provide. Now comes a lawsuit by one provider system claiming that 'big insurance' is collaborating with 'big providers' to make sure the pie grows over time. Specifically, West Penn Allegheny Health System is accusing rival University of Pittsburgh Medical Center of conspiring with Highmark Inc. to destroy the region's No. 2 hospital network and drive it out of business. The concern is that collectively they could raise rates and pass the increases on to employers and patients. See article.
Is it possible that an insurer would put its on long-term profits ahead the employers interest? Even pay the providers a little more to 'grow the pie'? What do you think?
In fact, insurers make a percentage of the total spend. The larger the spend, the more they make. Some may be starting to wonder if insurers would ever make real efforts to shrink the pie?
Providers have given discounts to insurers, but don't see any real value in the 'service' insurers provide. Now comes a lawsuit by one provider system claiming that 'big insurance' is collaborating with 'big providers' to make sure the pie grows over time. Specifically, West Penn Allegheny Health System is accusing rival University of Pittsburgh Medical Center of conspiring with Highmark Inc. to destroy the region's No. 2 hospital network and drive it out of business. The concern is that collectively they could raise rates and pass the increases on to employers and patients. See article.
Is it possible that an insurer would put its on long-term profits ahead the employers interest? Even pay the providers a little more to 'grow the pie'? What do you think?
Sunday, February 15, 2009
Lawsuits may impact pricing transparency.
A crop of lawsuits highlights the difficulty of determining reasonable provider payment rates. Providers will always want higher reimbursements while insurance companies aim to pay the least amount possible. Unfortunately for consumers, when you are using out of network providers you may get stuck in the middle.
Many insurers use the Ingenix pricing guide to determine “customary” fees. The Ingenix guide is ultimately owned by United. It seems to work well for the insurers; maybe not for providers and consumers. Thus the lawsuits.
AMA sues UnitedHealth – Settlement $350M - The AMA and others claimed that UnitedHealth underpaid physicians and shortchanged consumers when paying out of network claims.
AMA is now suing both Cigna and Aetna on similar claims.
New York AG Andrew Cuomo settles with UnitedHealth- Settlement $50M – This settlement will be used to build a public database to track provider fees and ultimately United will discontinue the Ingenix pricing products in this area.
New York AG Andrew Cuomo settles with Aetna- Settlement $20M- Aetna settlement contributes to the development of the public database and will stop using the Ingenix pricing databases.
Reports state that Cuomo has subpoenaed Cigna, WellPoint and others. No settlements or resolution yet on those.
We’ll keep a watch out for additional settlements, the development of the public database and how this may help consumers.
update 2/18/09: New York AG Andrew Cuomo settles with Wellpoint - Settlment $10M - Wellpoint now joins other larger insurers by paying $10M to the yet to be created nonprofit database company.
WellPoint’s subsidiary Empire BlueCross Blue Shield (“Empire”) is the largest health insurer in New York State, with approximately five million members.
The Nonprofit database company has yet to be selected or announced. We'll stay tuned.
Many insurers use the Ingenix pricing guide to determine “customary” fees. The Ingenix guide is ultimately owned by United. It seems to work well for the insurers; maybe not for providers and consumers. Thus the lawsuits.
AMA sues UnitedHealth – Settlement $350M - The AMA and others claimed that UnitedHealth underpaid physicians and shortchanged consumers when paying out of network claims.
AMA is now suing both Cigna and Aetna on similar claims.
New York AG Andrew Cuomo settles with UnitedHealth- Settlement $50M – This settlement will be used to build a public database to track provider fees and ultimately United will discontinue the Ingenix pricing products in this area.
New York AG Andrew Cuomo settles with Aetna- Settlement $20M- Aetna settlement contributes to the development of the public database and will stop using the Ingenix pricing databases.
Reports state that Cuomo has subpoenaed Cigna, WellPoint and others. No settlements or resolution yet on those.
We’ll keep a watch out for additional settlements, the development of the public database and how this may help consumers.
update 2/18/09: New York AG Andrew Cuomo settles with Wellpoint - Settlment $10M - Wellpoint now joins other larger insurers by paying $10M to the yet to be created nonprofit database company.
WellPoint’s subsidiary Empire BlueCross Blue Shield (“Empire”) is the largest health insurer in New York State, with approximately five million members.
The Nonprofit database company has yet to be selected or announced. We'll stay tuned.
Subscribe to:
Posts (Atom)
Posts
